Article: Euro Effects

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Euro Effects Introduction European Monetary System (EMU) is the arrangement by following which most EU (European Union) nations have connected their currencies to put a stop to great changeability and vacillations relative to one another. It was in 1979 that this system was organized in order to soothe and stabilize the foreign exchange and respond to price increases among member nations. However, sporadic changes not only elevated the values of strong currencies but at the same time, lowered the values of weaker currencies. In order to maintain the currencies within a constricted range, modifications in national interest rates were used in 1986. Later in the earlier phase of 1990s, the conflicting economic policies and conditions of its members sprained the EMU ("European Monetary System," 2009). The European Monetary Institute was established in 1994 as an intermediary to create the European Central Bank (ECB) and a common currency for the member nations. The ECB, working since 1998, holds the responsibility of arranging and implementing a distinct monetary policy and interest rate for the espousing nations in union with their national central banks. The member nations including "Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the Netherlands, Portugal, and Spain" ("European Monetary System," 2009) have incised their interest rates to an almost homogeneously near to the ground level since 1998. They did so in order to encourage development
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